Hamas (search) has even warned they would retaliate with threats not only against Israel but against the United States, as well.

The Bush administration said it was "deeply troubled" by the attack and that it had no advance warning.

Israel sealed off the West Bank and Gaza, banning Palestinians from Israel, and placed its security forces on high alert.

The Lebanese guerrilla group Hezbollah (search) fired at Israeli army positions on the Lebanon border on Monday, hours after Yassin's assassination. Israel responded to the attack with an airstrike and artillery fire, targeting suspected guerrilla hideouts near villages close to the Israeli-occupied Chebaa Farms.

Israeli helicopters fired three missiles as Yassin, his bodyguards and dozens of others left a mosque in Gaza City at daybreak Monday. Yassin, a quadriplegic who uses a wheelchair, and seven others were killed, including several bodyguards.

More than 200,000 Palestinians, some carrying billowing green Hamas flags, flooded the streets for the funeral procession. Thousands also took to the streets in the West Bank.

In addition to Yassin, 12 Palestinians were killed Monday, seven in the airstrike, four in clashes with Israeli troops and one while handling explosives.

U.N Secretary-General Kofi Annan condemned the killing as "contrary to international law," and urged all sides to remain calm.

European and Arab leaders condemned the killing. Egypt canceled a trip by legislators and other dignitaries to Israel to mark the 25th anniversary of the peace treaty between the two countries.

British Foreign Secretary Jack Straw said the assassination "is unacceptable, it is unjustified and it is very unlikely to achieve its objectives."

Calling Yassin an "archterrorist," Israeli Prime Minister Ariel Sharon — who personally authorized the strike — said Monday that Israel will press ahead with its war on terror.

"The war against terror has not ended and will continue day after day, everywhere," Sharon said. "It is the natural right of the Jewish people, like that of all nations in the world that love life, to hunt down those who rise to destroy it."

Silvan Shalon, the Israeli foreign minister, said from the White House Monday that Yassin was personally involved in so many attacks in the region — Hamas has been involved in about 50 suicide/homicide bombings against Israel — that he "is the godfather of suicide bombers."

"I believe that today, we delivered a very important message to all of those who are responsible for terrorist attacks against Israelis that they should be punished … they will pay for their crimes," Shalon said.

Batsheva Genut, spokeswoman for Israel's foreign ministry, told Fox News that the absence of a Palestinian Authority effort to fulfill the Mideast peace roadmap is to blame.

"Israel doesn't relish the role it's being forced to play today," she said.

White House: 'We Are Not a Traffic Cop'

Hamas, listed as a terrorist group by both the United States and Israel, promised to "bring death to every home in Israel." The group said Israel could not have launched such an attack without the permission of the United States.

But "The United States did not have any advance warning and did not approve of the strike," national security adviser Condoleezza Rice told Fox News on Monday.

White House spokesman Scott McClellan said Monday: "Hamas is a terrorist organization. We believe that all ideas need to remain focused ... to help resume progress toward peace and toward a two state vision."

He said the "Palestinian Authority needs to do everything it can to confront and dismantle terrorist organizations … we've always said that Israel has the right to defend itself."

When asked if the White House gave the go ahead for the attack, McClellan responded: "We don't give a red light or green light. I have often said we are not a traffic cop."

Israel's Shalon said, "Israel decided to take the decision by its own government and the decision to carry out this action this morning in Gaza was accepted by the Israeli government itself."

The U.S. embassy in Syria is warning Americans to be very alert for expected retaliation from terrorist groups following the assassination.

"We expect that emotions and tensions will be extremely high over the next few days given his prominent role and following," stated a message sent to Americans living in the area. "Because of the potential for demonstrations, the embassy cautions U.S. citizens to avoid large gatherings and neighborhoods where anti-American sentiment could run high in the near-term."

"Any time threats are made against the United States, we take them seriously," a U.S. counterterrorism official said.

State Department spokesman Lou Fintor said U.S. officials were in touch with Israeli and Palestinian authorities.

'An Eye for an Eye'

The Al Aqsa Martyrs' Brigades (search), a militant group allied with Yasser Arafat's Fatah movement (search), said in a faxed statement, "An eye for an eye, and the retaliation will be in the coming hours, God willing."

Hamas warned: "The Zionists didn't carry out their operation without getting the consent of the terrorist American Administration, and it must take responsibility for this crime."

"All the Muslims of the world will be honored to join in on the retaliation for this crime," Hamas continued.

"All of this ongoing violence … is happening actually within the context of the Israeli illegal belligerent occupation of the Palestinian territories. As long as this occupation continues, there is definitely going to be Israeli occupation violence ... and Palestinian violence to try to resist this occupation. The approach of trying to solve the problem by force and killing is proving to be backfiring, always," Palestinian Labor Minister Ghassan Khatib told Fox News.

"Only by … recognizing each other's legitimate rights … and only through peace negotiations the two sides can move nearer to realizing the legitimate objectives."

Several members of Israel's cabinet believed Yassin's assassination would provoke revenge attacks by Palestinian militants.

Joseph Paritzky, Israel's minister of energy, said although Yassin "wasn't worth living," his assassination may bring more attacks on Israel, especially since history shows that after such killings, "we pay a very high price."

"We are expecting a big retaliation from a terrorist movement and I do care about the lives of my citizens," Paritzky told Fox News. "I think it raises the morale of the people of Israel … but I think that we will not gain enough benefits from his killing."

The Israeli defense minister said Yassin was the "Palestinian bin Laden." Gideon Meir, an Israeli Foreign Ministry official, said Yassin was directly responsible for the scores of homicide attacks Hamas unleashed since 2000.

"He's not a spiritual leader -- Mother Theresa was a spiritual leader. This is a thug who killed hundreds of people," Ambassador Alon Pinkas, New York Israeli consul general, told Fox News. "We've done, morally, the right thing."